Like the majority of Gibraltarians, the chief minister – the territory’s most senior politician – is a fluent Spanish speaker. And, like many of the Rock’s 30,000 inhabitants he has a house in Spain, plays golf there when he can find the time, and clearly appreciates the culture and the people.

“The last time Caruana visited Strasbourg I introduced him to a table of Spanish Socialist MEPs and they were delighted to see him and speak with him and he immediately broke into fluent Spanish,” says UK Conservative MEP Charles Tannock, one of the European Parliament’s most fervent supporters of efforts to ensure the Rock remains under British rule.

But despite his obvious close links with Spain, and again like the majority of Gibraltarians, Caruana is very clear on one point; he does not want to be Spanish.

It is a message that the leader of the Rock’s centre-right Social Democratic Party has been hammering home since he was first elected to the chief minister’s job in 1996. And it is clearly a stance that strikes a chord with the Rock’s voters, as he was re-elected with a comfortable majority in 2000.

Since the middle of last year, Caruana’s campaign to ensure Gibraltar remains British has gone into overdrive, spurred on by fears among most of the Rock’s inhabitants that the UK and Spain are preparing to strike a deal on the territory’s future over his head.

“Gibraltar has been British for 300 years and we want to continue to be British,” he said. “We do not want to be Spanish.”

Those comments, made during a speech at Cambridge University in the UK in early February, are typical of remarks Caruana has been making to anyone who will listen for the past six months.

Gibraltar has been a British protectorate since 1713, when Madrid ceded it to London under the Treaty of Utrecht.

But Caruana is worried that the UK is preparing to sacrifice his beloved Rock on the altar of improved relations with Spain.

And he may have a point.

Diplomats say both Madrid and London are tired of the ‘Gibraltar question’ souring their ever-improving relations, especially when it comes to the question of EU reform.

The two countries currently have very similar visions for how the Union should develop.

Spain’s centre-right Prime Minister José María Aznar and his nominally left-wing UK counterpart Tony Blair both want to see the EU’s labour markets freed up and a more pro-business culture introduced across the Union. They even jointly penned an article on the issue in the Financial Times shortly before Spain took over the rotating EU presidency at the beginning of the year.

But despite the recent entente cordiale, relations between the two EU partners are still regularly hobbled by a 300-year-old argument over the 6.5-square-kilometre promontory that used to have enormous military and strategic importance for the UK.

And what is worse, as far as the EU is concerned, is that London and Madrid’s bilateral squabble over Gibraltar has messed up a whole range of Union-wide initiatives. The Gibraltar dispute has delayed efforts to improve EU air transport policy, prevented moves to crack down on tax havens and hindered EU deals on insolvency, cross-border divorces, finger-printing asylum-seekers and UK efforts to sign up to parts of the Schengen free movement agreement.

In a bid to settle the question once and for all London and Madrid pledged last year to come up with a solution to the question of Gibraltar’s sovereignty by this summer and diplomats say a deal that both capitals would be more than happy with has already been drafted.

The only problem with this apparently exemplary exercise in modern EU consensus-building is that Caruana and the people of Gibraltar are dead against it.

They believe, probably rightly, that the UK and Spain will propose some form of joint sovereignty for the Rock.

“Caruana sees any idea of pooling of sovereignty with Spain as undesirable and worse still a stepping stone to Spanish sovereignty,” says Tannock.

London insists that even if the two countries do agree on joint sovereignty, the people of Gibraltar will have the final right to accept or reject the deal in a referendum.

But Caruana argues that even if, as would almost certainly be the case, the Rock voted ‘no’, the deal would not go away. He says it could always be resuscitated at a later date and would remain like a ‘Sword of Damocles’ hanging over the heads of the Rock’s inhabitants.

Caruana has been invited to take part in the UK-Spanish talks as part of the UK delegation but has so far refused to accept the offer, saying he should be allowed to attend in his own right. But despite this hard-line stance, there are those on the Rock who say the chief minister is being soft on the issue.

At a ‘No to British Treason’ protest held in Gibraltar at the beginning of February, the leader of the Rock’s main opposition party, Joe Bossano, accused Caruana of not criticising London’s stance strongly enough.

And this gives some indication of the conundrum currently facing the chief minister. People who know the 45-year-old London-trained barrister say he is a clever, pragmatic man who would ideally like to strike the best deal possible for the Rock.

Like most senior politicians Caruana doesn’t have much time to himself, especially with worry running so high over the Anglo-Spanish talks. But when he does manage to take a few days off the father of six likes to refine his golf swing. He is also a keen sailor, but he parted with a beloved pleasure boat a few years back when the demands of office left him little time for nautical pursuits.

The chief minister is also an accomplished bridge player and friends say his card-sharp’s skills could come in handy if he ever decides to sit down across the table from the Spanish.

But his electorate’s refusal to consider any sort of compromise with Spain has left Caruana with little option other than to fall back on well-worn ‘Keep Gibraltar British’ rhetoric.

Observers say attitudes to the sovereignty question do not seem to have changed greatly in Gibraltar since 1969, the last time the issue was put to a referendum and when Spain was a right-wing dictatorship run by General Francisco Franco.

Spain has changed beyond all recognition since then and is now, like the UK, a modern, prosperous and democratic EU member state.

But in Gibraltar, the clock seems to have stopped many decades ago.

“Any chief minister is always up against it,” says Tony Venables, of EU citizens’ rights lobby ECAS, which has lodged a number of complaints with the European Commission over border-crossing delays at the Spain-Gibraltar frontier.

“When he was first elected in 1996 he sounded quite pragmatic but his tone is much tougher now.”

Tannock agrees. “He’s an able and charismatic figure who I think will fight to protect Gibraltar’s interests,” the MEP says. “But I don’t see any clear and easy compromise ahead that would please all three sides.”

Most external observers now believe that in the long run the people of Gibraltar will have to give some ground on the sovereignty issue. The Rock will soon lose its status as what one UK diplomat recently described as a “super tax haven” thanks to a new Organisation for Economic Cooperation and Development (OECD) agreement to crack down on fiscal paradises.

If it agrees to a joint-sovereignty deal, such as the one apparently being prepared by London and Madrid, it has been promised significant British, Spanish and EU aid to help adapt to its change of status.

But if it sticks to its current stance, some UK officials have warned that it could end up becoming an economic backwater. So if Caruana continues with his hard-line position on the talks, he risks seeing the Rock’s once solid economy crumble beneath him within the next decade.

But if he adopts a more conciliatory tone, he could well lose the next election. In other words, it looks very much at the moment as if he is stuck between…